ACH Processing
ACH processing is the operational mechanism executing daily MCA payments — initiating Automated Clearing House debits from merchant business bank accounts on scheduled basis — the dominant MCA payment infrastructure for ACH-structured advances.
Why This Matters
ACH processing is the operational backbone of modern ACH-based MCA. The mechanics: funder's ACH originator (usually a bank partner) initiates daily ACH debits at scheduled amounts from merchant business bank accounts. ACH transactions settle T+1 or T+2 depending on processing window. Failed ACH transactions (insufficient funds, account closures) trigger NSF events recorded against merchant payment history. ACH processing requires merchant authorization and proper Nacha rule compliance. Major ACH processors serving MCA funders: Bank of America, JPMorgan, Wells Fargo, and specialty fintech platforms like Modern Treasury, Stripe ACH, or Plaid Transfer.
Frequently Asked Questions
Frequently Asked Questions
What ACH rules apply to MCA payments?
Nacha (National Automated Clearing House Association) operating rules govern ACH transactions. Key MCA-relevant requirements: merchant authorization for recurring debits, proper transaction codes (typically PPD or CCD), notification requirements for amount changes, and dispute handling procedures. Compliance with Nacha rules is essential for ACH origination access.
What happens when MCA ACH payments fail?
NSF event recorded against merchant payment history. Funder may retry the ACH (typically 1-2 retries with brief delays). Repeated failures may trigger collections workflow including merchant outreach, payment plan negotiation, or escalation to default workflow. Multiple ACH failures often indicate emerging payment problems requiring intervention.